Economic Development Tax Incentives Project

Economic Development Tax Incentives Project



Pew’s tax incentives project helps state leaders adopt policies that make their economic development strategies more effective, accountable, and fiscally sound.  

Why Tax Incentives Matter

States spend billions of dollars a year on tax credits, deductions and exemptions meant to encourage businesses to create or retain jobs and make investments. When designed and managed well, tax incentives can strengthen a state’s economy. But Pew’s research reveals that lawmakers often approve or continue incentives without knowing their potential cost or whether they are working. State leaders need better information to avoid unexpected budget challenges, identify effective incentives, and reform or end programs that are not meeting expectations.

See our Frequently Asked Questions page for examples of economic development tax incentives and how these policies affect businesses and state budgets.

How We Conduct Our Work

We study the policies and practices states have used to generate much-needed answers about the budget risks and economic returns of tax incentives. Based on this research, we work with leaders in selected states to advance policies that:

  • Protect budgets from unexpected tax incentive costs;
  • Evaluate all tax incentives on a regular schedule; and
  • Inform lawmakers’ policy choices with evidence from evaluations.

Evaluating State Tax Incentives


August 1, 2013

Rhode Island's Plan for Evaluating Tax Incentives

Rhode Island’s tax incentive evaluation process will help the state base its economic development strategy on solid evidence. Here’s how the evaluation process works. More
December 13, 2012

Avoiding Blank Checks

Reliable cost estimates and annual cost controls for tax incentives have helped states promote job creation and economic growth while avoiding unexpected budget challenges. But Pew’s analysis shows that policy makers often create tax credits, deductions, and exemptions without these tools, raising the risk of budget shortfalls and unplanned spending cuts or tax increases to close them.  More

Evidence Counts

A report by the Pew Center on the States concludes that 13 states are leading the way in generating much-needed answers about tax incentives’ effectiveness. The study highlights a wealth of promising approaches states have taken to help lawmakers find those answers.  More
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